10-09-07 FPAC Agenda - Laserfiche WebLink

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City of Cloquet Fund Balance Policy Fund Balance and Net Asset Guidelines(Fiscal Year End) Reserved Fund Balance and Restricted Net Assets- Portion of fund balance that is not appropriable for expenditure or is legally segregated(restricted net assets)for specific future uses. The City has several items that are legal restricted to a certain use such as: police forfeiture funds,federal and state economic development revolving loans,park dedication fees,and bond proceeds. The City has several amounts unavailable for appropriation such as: advances and deposits,inventories,etc. These types of items will be reported as reserved fund balance and/or restricted net assets as required. Designated Fund Balance—Designations represent management's intended use of resources. Designation for cash flows—This designation will be established for the General Fund and Special Revenue Funds that are funded largely from local government aid,property taxes,and market value credit. The amount will be 50%of these items since the majority of these revenues are normally received in July. Designation for capital projects—All amounts in the Permanent Improvement and Public Works Reserve are used to fund the capital improvement program. The fund balance in these funds will all be designated for capital. Designation for economic development-The City has grants and property tax levy dedicated for economic development. These funds will be designated for economic development. Designation for revenue stabilization—Revenues can fluctuate greatly from year to year,especially interest earnings, and, in previous years,local government aid. This designation will be used if determined to be needed by the City Administrator and Finance Director. Undesignated Fund Balance and Unrestricted Net Assets—Current resources available for which there are no government self-imposed limitations or set spending plan. General Fund—To provide for emergencies or contingencies, such as revenue shortfalls,that the City may encounter as part of its operations,the unreserved undesignated fund balance shall be set at ten percent(10%)of the ensuing years General Fund operating expenditures(not including capital outlay, debt service or transfers to other Funds). The unreserved fund balance should be at a minimum of 35%to 50%of fund operating revenues or no less than five months of operating expenditures according to the Office of the State Auditor(this includes the designation for cash flows). The City's goal will be to follow this recommendation. • Approved